You may have thought of selling your car for some reason. Maybe you want a new one, or you just don’t want a car anymore.
Whatever the reason is, you want your car sold. But what if you still haven’t paid off your car completely?
When your car hasn’t been paid off completely, you still don’t own it. It means that your lender still owns it partly, if not wholly.
Selling your car is easy, but selling it with a loan on it is another thing. So, can you possibly sell your car when you still have a loan on it?
Learn more details about it as you go through this article.
How to Sell Your Car?
Selling your car is simple, but the whole process is a little more complicated than you might think. Don’t worry, though; you can sell your car pretty easily and quickly.
It’s probably a good idea to negotiate your price first. Some dealerships even offer financing deals if you decide to pay with a cash offer.
Before making your cash offer, you should look up some used cars on sites like Kijiji or Craigslist. You’ll want to compare your vehicle with other models with similar specs.
If they all appear to be good deals, you might want to buy one. You can also use a trusted local used car dealership to get a price on your car.
What to Consider Before Selling Your Car
If you’re considering selling your car to pay down your loan, you’ll need to know how much you still owe on it. Whether it’s more or less than what you could get by selling it, and how your lender requires that the transaction be handled.
Nevertheless, you should communicate and negotiate with your lender about it.
You should know the basics before selling your car. There are things to consider and determine in selling your car that hasn’t been paid off.
Determine your car’s value
First off, you should determine your car’s value. Your vehicle’s worth depends on how well it was taken care of and its present condition.
Suppose it is in good condition, the better. Whether your car is insured or not contributes to its present value.
As mentioned above, you can compare the value of your vehicle to the prices of used cars offered by car dealers, whether it be online or not.
You can also use vehicle valuation sites, such as Edmunds, that might help you determine your car’s value. You just have to indicate the information needed, such as your car’s model, brand, and year.
Determine Your Payoff Balance
Knowing how much is left on your loan is important. You can get the payoff amount from your lender to make it official and easier.
The payoff amount is different than your current loan balance. Your payoff amount is calculated by including unpaid fees such as interest and other costs accrued until you plan to pay off your loan.
After determining your payoff amount, subtract the same from your car’s current value. The difference will determine how much you are getting from selling your vehicle.
If your car’s value is greater than your payoff, then you have positive equity. It means you have gained extra money.
On the other hand, if you have a negative result or difference, it is called negative equity. You may have to cover or pay for the negative difference to pay off your loan.
Talk to your lender
For a smooth transaction, it is best to discuss it with your lender. They might suggest ways to make the sale easier.
They may make transactions directly with your buyer and process the transfer of title to them. It may also include additional fees.
Regardless, it still depends on your lender’s policies.
How Do You Sell a Car With a Loan on it?
With a car loan, you agree to pay back the amount you borrowed, plus interest and any fees, within a set time. The legal interest your lender has against your property is called a lien.
What happens when you decide you don’t want the car anymore and decide to sell it?
Selling your car is easy, but selling it with a loan on it is another thing. Selling your car for cash is what you want, and if you don’t have any money or the proper paperwork you will need to get it sold, how do you go about selling your car with a loan on it?
After determining the value of your car, your payoff amount, its difference, and a discussion with your lender, you can decide how to sell your vehicle. You should also consult with experts about what legal documents are needed.
The common way to sell your car with a loan on it is to find someone willing to buy it from you, but this is tricky because your vehicle may not be legal in your state. Before you consider selling your car with a loan on it, make sure the buyer knows you still have a loan on it.
You will need to find a reputable person to sell your car with a loan on it. Sometimes the person will have to pay a fee to do the deal, but that’s okay because it is a small price to make it legal.
The prospective buyer may also assume the balance payment and let your lender process the transfer of title. And the buyer also gives the amount that is due to you.
You may also be able to get someone to sell your car for you.
Where to Sell Your Car?
You have two options where to sell your car. You can either sell it to a dealer or sell it privately.
You may sell your car in a dealership. Nonetheless, the price will be lesser than what you receive when you sell it privately.
Selling your car privately is a bit complicated because you don’t officially and legally hold the title of ownership. A private sale may require more paper works than selling the car to a dealer.
Some legal documents that the Department of Motor Vehicles require are:
1. Bill of Sale – A motor vehicle bill of sale outlines the terms and conditions of a vehicle purchase between a buyer and seller. It can be used as proof to your local Department of Motor Vehicles (DMV) for a change of ownership once completed and signed. To complete registration, the new owner will need a copy of the signed bill of sale.
2. Release of Liability – A vehicle release of liability form is used to notify your local Department of Motor Vehicles (DMV) or Regional Transport Office (RTO) that you have sold the vehicle. It is also to ensure that you are free of any liability that may arise after the sale.
It is best to let your lender know and discuss it with them since selling a vehicle involves the transfer of title. You can also post your car details on marketplaces online for a wider scope.
Other Option Aside From Selling Your Car
If selling your car does not work out like how you wanted it to, you still have other options you can choose from. You need to make the wisest decision to avoid further loss.
- Keep the car. Continue and finish off the loan
- Trading in your car
- Declare your car as repossessed
To Sum Up!
Selling your car when you still have a loan may be easy when you think about it. But, it is more complicated than you think it is.
It is important to know your car’s worth and your payoff amount before deciding to sell your vehicle. And most especially, you have to discuss your plan of selling the car with your lender to avoid complications.
When planning to sell your car with a loan on it, let your buyer know. Such a transaction is risky, and the buyer might be reluctant to make a deal with you.
If you are unsure of what to do, consider consulting with your lender or the Department of Motor Vehicles in your locality.
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